Invoice Finance for Temporary Staffing Agencies

Temporary staffing agencies can experience industry specific monetary issues, that’s where Invoice finance for temporary staffing agencies fits in as a funding solution. When you’re distributing staff to other businesses on a temporary basis, you can experience many overheads and up-front costs before you receive payment. Which in turn, can put a strain on cash flow and disturbs company growth.

Invoice finance can be an extremely beneficial tool for businesses in the temporary recruitment industry. It will help to overcome a cash flow shortfall; With invoice finance businesses can achieve a stable and healthy cash flow, which is essential for running a successful business.

Let’s take a closer look at invoice finance for staffing agencies, and how it improves cash flow and supports business growth.

How can Invoice Finance help Temporary Recruitment Agencies?

There are several ways in which invoice finance can help recruitment businesses that provide temporary staff who are employed on a timesheet basis and often paid weekly.

Covering upfront costs and payroll. Many agencies will incur costs before they are paid by their clients, invoice finance can provide them access to the cash they need to cover these costs. Businesses can access the funds from their invoices (generally within 48hrs of the invoice being raised), this allows the agencies overheads to be paid, as well as the payroll for the temporary staff.

Business Growth and Meeting Client Requests. Invoice finance can help businesses meet unexpected requests from clients, such as an increase in the number of staff required at short notice. By using invoice finance, agencies can free up cash that would otherwise be tied up in unpaid invoices, and use it to invest in other areas of their business.

Maintaining a Stable and Healthy Cash Flow. Invoice finance is flexible and adaptable, that can be tailored to the specific needs of temporary recruitment agencies.

 

How does Invoice Finance Work?

Invoice finance is a form of alternative funding that allows businesses to access money against the value of their outstanding invoices by selling their invoices at a rate. This can be a useful way for businesses to free up working capital, as they will not have to wait until their customers have paid their invoices before they have access to funds.

There are two types of invoice finance that we will focus on: invoice factoring and disclosed invoice discounting.

With invoice factoring, the business sells its invoices at a discounted rate, this enables the business to receive an advance payment, which is typically between 80% and 90% of the invoice value. The invoice finance provider will then provide credit control to ensure the invoices are settled and once the customer pays the invoice, the remaining balance less any associated fees are released.

Invoice discounting provides the same access to funds but here, the business retains control of its credit control and is responsible for chasing up all payments. The business will still pay a fee for using the service, but in the absence of outsourced credit control, this is typically lower than invoice factoring.

What are the Benefits of Using an Invoice Finance Facility?

  • Improved cash flow: as businesses can access the funds from their invoices sooner, this can help to improve their overall cash flow.
  • Flexibility: invoice finance facilities can be flexible, so businesses can choose an advance against certain customers and not others.
  • Enhanced credit rating: as invoice finance can help businesses to improve their cash flow, this can in turn help to enhance their credit rating.
  • Access to cash within 48 hours.
  • No need to wait between 30 – 90 days for customers to pay.
  • The ability to free up time spent chasing late payments.

If you are a business that provides temporary staffing, then an invoice finance facility could be an extremely useful tool to improve your cash flow and expand your business.

To find out more, get in touch with our team. We are happy to talk through your requirements and offer you a tailored solution.